About Us

Structure

AECI is an explosives and specialty chemicals group domiciled in South Africa. Group businesses service the mining and manufacturing sectors both locally and internationally.

The focus for growth is on Africa, South East Asia and South America. AECI’s businesses are characterised by application know-how and service delivery.

They often operate in niche markets and are supported by leading technologies which are developed In-house or are sourced from international partners.

These 15 business units, including Chemical Initiatives, supply specialty chemicals, raw materials and related services for industrial use across a broad spectrum of customers in the manufacturing and mining sectors. More specifically, Chemical Initiatives is a subsidiary of AECI, which is listed on the JSE.

> Umbogintwini Plant

Situated south of Durban, South Africa, the Umbogintwini Plant is the production centre of Chemical Initiatives’ business and the home of South African sulphuric acid production since 1908. The plant, which has a nameplate capacity of 500 tons of sulphuric acid per day, is a double-absorption four-pass convertor plant. This plant is also configured into integrated production plants that allow it to produce high-quality sulphur trioxide, sulphur dioxide, aluminium sulphate and plant nutrient sulphur.

The current Umbogintwini facility is committed to the highest standards on operations, emissions and the environment and is proud to have ISO 9002 / 2000, ISO 14001 and OSHAS 18001 accreditations.

> Chamdor Plant

The Chamdor plant was established in the late 1950s by Hoechst South Africa and is situated west of Johannesburg, near Krugersdorp. The polyphosphoric acid plant was commissioned in 1982 and is situated on a section of the site now owned by AECI. The plant is supported by a comprehensive infrastructure which includes five warehouses, bulk storage tanks, decanting and filling facilities, a QC laboratory and engineering workshop, in addition to the administration offices, meeting room and staff change rooms.

In-house utilities include a steam boiler and a diesel generator capable of supplying the total needs of the plant in the event of an electrical power failure. The facility has been fully maintained and continuously upgraded over the past three decades, to the extent that the manufacturing process is now fully automated, with the Siemens PLC upgraded to the latest specification in 2011.

Polyphosphoric acid concentration is customised for a number of end users, both locally and abroad. Concentrations up to a maximum of 118% H3PO4 can be produced, with normal requirements falling between 105% and 116% H3PO4. The finished product is available in bulk as well as 40kg and 335kg plastic drums.

A quantity of polyphosphoric acid is diluted to 65%, 75%, 80% and 85% concentration and further purified for sale as technical and food grade phosphoric acid. Chemical Initiatives is the largest supplier of purified phosphoric acid to the local market and has developed long standing supply relationships with the major local distributors and end users. Purified phosphoric acid is available in bulk as well as 40kg and 335kg plastic drums.

The site is accredited with ISO 9001:2008, ISO 14001:2004, OHSAS 18001 and is Halaal and Kosher certified.

> Metswako Chemicals

Metswako Chemicals is an empowered subsidiary of Chemical Initiatives, offering a complete range of chemical management services to mines in Botswana. These extend to the procurement and safe logistics management of an extensive range of chemicals for mineral processing and effluent treatment applications, as well as transport route assessments and turnkey packages for the design and construction of chemical offloading and storage facilities.

Metswako Chemicals is also able to offer a fully outsourced Build, Own and Operate service in Botswana, as part of which the capital and risks are shared between Metswako and client.

Intro

> Model & mission

Chemical Initiatives has based its business model on adding value to those it supplies, marketing core chemical products and assuring 100% availability, flexibility and reliability when it comes to product supply.

Furthermore, buffer capacity and the ability to be proactive and agile in a changing market give Chemical Initiatives the edge on its competitors.

The company’s driving mission is three-fold:

to provide the chemicals, services and innovative ideas that customers need;

to use its inherent skills, experience and systems to reduce risk and cost to both customers and suppliers; and

to do this so efficiently that environmental impact and impact on surrounding communities are minimised.

Approach

> Safety

To achieve its mission, Chemical Initiatives prioritises safety, service and integrity. To begin with, the company believes that all occupational illnesses and injuries are preventable and will not deliver hazardous products nor operate in unsafe or substandard installations. It is the responsibility of each Chemical Initiatives employee to make safety his or her number one priority.

> Service & Integrity

Service is defined by the fact that customers are the foundation for the company’s success. Chemical Initiatives focuses on customers’ needs, strives to exceed their expectations and communicates honestly at all times, treating employees, customers, suppliers and stakeholders ethically and with integrity.

> Strength

Chemical Initiatives’ unique strength in industrial chemicals is its knowledge of the marketplace and its ability to respond to the constant state of flux with consistent supply and demand. This is based on the company’s knowledge of the various supply sources, storage facilities, customer usage patterns, logistics and diverse personalities at play in the industrial chemicals sector.

CSI (Corporate Social Investment)

Chemical Initiatives, as a business, is focused on the manufacture of sulphur-based chemicals and the trading of bulk chemicals. But for us, this is more than just business: we are aware of our responsibilities to manage direct impacts on our stakeholders, communities and, critically, the environment.

AECI Specialty Chemicals Cluster has a real awareness of its Corporate Social Investment responsibilities and its concrete manifestation of these principles, extend, in practice, to a proactive approach to assisting people in becoming empowered and self-sufficient.

Community involvement

DELIVERING TOWARDS SUSTAINABLE DEVELOPMENT

AECI is committed to the well-being of the communities in which it operates and to vulnerable communities in South Africa in general. Structures in place to support efforts in this regard include the AECI CSI Fund (“CSI Fund”), the AECI Community Education and Development Trust (“AECI Trust”) and the Tiso AEL Development Trust.

AECI adopts a selective and honest approach in its engagement with the development sector – a complex arena with many role players all striving to improve the lives of vulnerable groups across the country. It is recognised that the sustainable value of companies’ investments can be maximised through partnerships with leading organisations and initiatives in the field.

Advancing potential, promoting good practice and evolving ideas are the objectives of AECI’s investments in the promotion of sustainable socio-economic development. Strategic areas of interest include education, skills development and the holistic care and support of children. The principles of empowerment, partnership, good governance, innovation and effective leadership underlie all social development initiatives. In 2013, the Group contributed over R10 million to socio-economic development in South Africa. The CSI Fund invested over R6 million in not-for-profit organisations and educational institutions with grants ranging from R25 000 to R2,7 million. Over 20 organisations and 5 000 individuals benefited from this.

No-cost leasing of land and buildings owned by AECI to non-governmental organisations (“NGOs”) and development related contributions from Group companies benefited additional organisations, individuals and communities.

COMMUNITY SOCIAL INVESTMENT (“CSI”) FUND

The CSI Fund was restructured in 2013 to focus on education; infants and orphans and vulnerable children (“OVC”) care and support; skills development for people with disabilities; and environmental initiatives. The driving principle is that CSI is an investment and not “giving for and to charity”. Better monitoring and evaluation are in place, improved reporting is expected, grants have targeted outcomes and are impact-based, expectations are high but realistic, and the importance of honest partnerships is emphasised.

The education component aims to improve learner outcomes at primary, secondary and tertiary levels by enhancing the quality of and access to teaching and learning. These investments took various forms in 2013, from assisting schools to purchase busses transporting disadvantaged students to reduce the transport burden in rural Eastern Cape, to funding teacher and learner development programmes in the North West and Limpopo.

It was also recognised that new projects sometimes need an injection of resources before they can evolve to their full potential. As part of the “evolving great ideas” platform, AECI entered into a five-year partnership with the University of the North West in 2012. In response to the shortage of adequately prepared learners entering tertiary education for careers in scarce skills, the University is piloting the Science Engineering Technology and Health Academy at the Ferdinand Postma High School in Potchefstroom. This initiative is a collaborative effort between the University, the North West Department of Basic Education and various donors. It aims to prepare learners for professional careers in the fields of engineering, medicine, finance and economics, and mathematics and science.

To advance the potential of young minds interested in science, AECI’s five-year partnership with Wits is seeing 4 000 first-year students accessing a state-of the- art chemistry laboratory on campus. The laboratory is part of the Wits Science Stadium, a large-scale infrastructure project that also offers specialist laboratory facilities for biology and physics. The Stadium was created in response to calls from government and industry to address the urgent need for suitably qualified and well educated science, engineering and technology graduates as South Africa grapples with global issues of climate change, clean energy, water management and disease.

Multi-year partnerships with several NGOs, including the Mahwelereng Centre of Hope in Limpopo, JICAMA and Action in Gauteng, support the provision of education and artisanal skilling for children and adults with disabilities. Community-based organisations, such as the St. Mungo’s Diepsloot Community Action, provide adult-based education and training and artisanal skilling for unemployed community members. AECI also sees value in business-2-business support, assisting projects initiated by other businesses that show good practice and potential for growth. An example is the Virginia Jewellery School in the Free State. This Free Gold Foundation project aims to create sustainable jobs through training and qualifications in jewellery-making, boost the local economy through the beneficiation of gold and develop a jewellery hub for local and international markets.

The CSI Fund engaged with the “My Future My Career” initiative, a public-private partnership targeting more than 100 000 learners across the country, providing them with information about career options and respective educational requirements. A partnership with the NBI also ensured added development support nationally as part of the larger business community.

Social development activities centre on infant and OVC programmes to assist organisations working to improve the social, educational, health and psychosocial aspects of children’s development. This involves multi-year partnerships with NGOs that have illustrated good practice such as Nazareth House, COMPASS and Cotlands. An important aspect of their work is the emergency response they provide to abused and abandoned babies.

Another beneficiary of the “evolving great ideas” platform is the Shaken and Abused Baby Initiative (“SAABI”). This project was conceptualised in response to the highly publicised deaths of infants in 2012 due to severe abuse. The process of identifying such abuse immediately to protect the child and mitigation against further abuse is complex and requires highly specialised expertise. As such SAABI, in partnership with transforthe Charlotte Maxeke Hospital, is streamlining processes in Gauteng to optimise the mitigate of child abuse and potentially reduce incidences thereof. The planning and implementation of the initiative are being documented for further research and knowledge sharing with the long-term aim of rolling it out across the country.

The CSI Fund’s environmental programme will take shape from 2014. It will focus on environmental education and awareness, and green development. In 2013, as a starting point, funds were invested in the Emvelowise Women Adopt a River (“EWARP”) project. This is an inspiring display of the leadership of a young woman and a community of volunteers who, despite not receiving any compensation, are committed to cleaning seven streams and two rivers in the Folweni area near Umbogintwini in KwaZulu-Natal. EWARP received the eThekwini Mayor’s Award in the best Group in Environment category in 2013.

AECI COMMUNITY EDUCATION AND DEVELOPMENT TRUST

This Trust will be launching its strategy and issuing its first call for applications in 2014. AECI formed the AECI Community Education and Development Trust as part of its Broad-based Black Economic Empowerment imperative. The Trust is a 3,5% shareholder in AECI and its primary objective is to support the sustainable socio-economic empowerment of communities in South Africa in areas where AECI operates or has an interest. Its strategy includes an Education Programme with the developmental goal of building bridges to enable access to professional qualifications for young adults; a Skills Development Programme that seeks to increase the number of artisans and technical resources in the country; and the Water For Life programme which aims to provide education and awareness on issues of water conservation and strengthen efforts to provide potable water, especially to rural communities. It is expected that more than R10 million will be invested in 2014 – a pilot year that will test the robustness of the Trust’s strategy and objectives and implementation thereof.

The Trust’s Board of Trustees comprises three independent Trustees, two AECI Trustees and one AECI member. The Independent Trustees are accomplished in the business and academic arenas and have strong social capital. They provide a breadth of expertise in sectors including the sciences, disability and psychology. The AECI Trustees and member provide specialist knowledge in the areas of human capital, finance and business.

TISO AEL DEVELOPMENT TRUST

This Trust is funded through dividend income from its share ownership in AECI, and through contributions from the AECI CSI Fund and the AEL business. It is tasked with implementing AEL’s CSI strategy which focuses on education (specifically mathematics and science), health and social development. AEL’s international sites align their own initiatives with the same strategy but adapt them to fit the respective country’s socio-economic circumstances. Ensuring maximum impact of CSI initiatives is paramount and, accordingly, its investment is primarily in Tembisa in South Africa given the socio-economic needs in this area as well as its proximity to Modderfontein, AEL’s largest manufacturing facility. Beneficiaries include eight schools (four primary schools and four high schools).

They are supported through the Maths Centre, an NGO which equips both educators and leaners with requisite skills. The Centre enables access to resources and materials that facilitate the ease of teaching and learning with teaching aids, laboratory material, the incorporation of technology into learning, training workshops for teachers, coaching sessions for learners and workbooks for both teachers and the learners in these schools. The results of these efforts continue to be encouraging.

This Trust also works with the Community and Individual Association City Campus (“CIDA”), an institution that concentrates on access to affordable higher education for students from underprivileged backgrounds. The Trust’s partnership with CIDA ensures that students obtain a three-year business administration qualification with an opportunity to specialise in Information Communication Technology and/or Finance. A number of CIDA’s students are the first generation of graduates in their families. This can assist in breaking the generational poverty cycle in South Africa and contribute to changing the socio-economic status of these beneficiaries’ communities.

In health and social development, the Trust has partnered with Thuthukani Centre, a not-for-profit community organisation in Ivory Park in Tembisa, that seeks to respond to the plight of vulnerable children and orphans of HIV/Aids. Together with Thuthukani, the Trust furthers the delivery of early childhood development by helping children to get the proper preparation and foundation for their education careers.

Internationally, AEL operates predominantly in developing economies where businesses are confronted by socio-economic realities such as poverty, joblessness and the wage gap. AEL in all its countries of operation seeks to be a force for good. In Indonesia, for example, the company has partnered with its largest customer, Kaltim Prima Coal, to help children born with facial disabilities such as cleft palates gain access to the transformative surgery that the Smiles and Hope Programme runs in that country. In Zimbabwe AEL has partnered with the Tariro Hope Ithemba Trust, a charity organisation which benefits visually impaired and hard-of hearing children. In Zambia, AEL works with neighbouring communities in assisting the aged and vulnerable and in the roll-out of beneficial malaria prevention programmes.

AECI EMPLOYEES SHARE TRUST

4 225 employees are beneficiaries of this Trust, with 77% of them being Black. 20% of the share allocation has been allocated to Black Managers across the AECI Group in South Africa.

The objectives of the Trust are:

– to recognise and reward employees who have enabled and continue to enable the success of the Company;

– to align the interest of employees with those of shareholders; and

– to improve the Group’s ability to attract, incentivise and retain high-performing Black employees and Managers.

Of the Trustees on the Trust’s Board three are independent, one is Company appointed and one has been elected by the beneficiaries. In line with the AECI Employees Share Trust agreement, a dividend in the sum of 29 cents per B ordinary share was approved by the AECI Board in February 2014 and will be paid to beneficiaries of this Trust in the second quarter of 2014.

BEE

Seeing Black Economic Empowerment (BEE) as more than just a numbers game, Chemical Initiatives is committed to an employment environment that provides equal opportunities for all employees, in line with the Employment Equity Act of 1998. It is for these reasons and more that Chemical Initiatives is proud to announce, that we have successfully achieved a LEVEL 4 BBBEE score, with a Recognition level of 100%. Therefore each Rand spent by our customers on goods or services will be recognised as 100% for their B-BBEE procurement analysis.

The company’s various practical commitments to BBBEE include:

> Learnerships for the previously disadvantaged, to develop them into qualified artisans

> Skills development for employees, via a wide range of SETA courses attended

History

Chemical Initiatives was established in 1907 when Arthur Chamberlain, chairman of Kynoch in England, visited the Transvaal to obtain contracts to supply explosives to South Africa. Finding that the two existing explosives factories were selling explosives at prices lower than he could hope to, he set his sights further south, to a 1400-acre site at Umbogintwini, Natal.

By November 1908, the first sulphuric acid plant was commissioned and by January 1909, the first charge of explosives was produced.

At the end of World War 1, a worldwide surplus of military explosives unfit for commercial purposes necessitated the formation of Explosives Trade Limited. Kynoch’s Umbogintwini factory and Modderfontein plant were part of this new company, joined under the same management. Under the new agreement, Umbogintwini would concentrate on fertilizer production, while Modderfontein would be the explosives factory, later becoming the world’s largest.

The manufacture of super-phosphates started at Umbogintwini in 1919 with a second plant being built in 1926. By 1931, the old plants were abandoned and a modern plant was erected. With the formation of African Explosives and Industries (AECI) in 1924, Umbogintwini developed into a world-scale industrial chemical complex, manufacturing a wide range of chemical products.

The polyphosphoric acid plant at Chamdor was established in the early 1980s to supply the raw material for the manufacture of a catalyst for Sasol. Since then, the plant capacity has more than doubled and it can now be classified as a true world scale manufacturing facility with a modern PLC control system.